Looking to give “the stuffy steakhouse a casual makeover,” Joe Bastianich and Tim Love begin season three being pitched business plans for two different steakhouses.
Room 55 (55 Steak)
The first to present are Room 55’s Vinny Accardi – the Chef and Owner – and Trevor McGrath – the restaurant’s Director of Operations. With his background in butchering, Vinny makes his own fabrications* and can showcase unique cuts of meat. Vinny is able to focus on cooking because Trevor runs the rest of the business and has done so without being paid for a year. As such, Vinny plans to split his ownership share of the business 50/50 with Trevor.
(*In the world of cooking and butchering, fabricating is the process of breaking down a carcass into consumer cuts.)
Vinny and Trevor pitch to Joe and Tim their vision for a new type of steakhouse tentatively called 55 Steak. Wanting to create the type of high-end steakhouse in Queens that are common to New York City, Trevor explains that the goal is to give “Queens what it doesn’t have: high-end food without the pretention.” To get 55 Steak going, Vinny and Trevor ask for a $375k investment for 25% stake in 55 Steak.
Though Joe and Tim are impressed by Vinny’s cooking, they are troubled by Room 55’s low profitability. On a busy Saturday Room 55 can make up to $2,500, but has only made about $100k in its first year of operation. Vinny and Trevor do believe that they will triple that amount next year, but Tim and Joe are left worried. Further, Tim is not convinced that Trevor adds any value to the business.
Midgley’s Public House
The second presentation was by Mike and Lacey Midgley from Stockton, California. The owners of the Midgley’s Public House pride themselves on the fact that their restaurant is fun and approachable to those who wouldn’t normally go to steakhouses. Looking to open a second location in mid-town Sacramento, the Midgley’s are hoping to take advantage of the city’s redevelopment around Kings Stadium in order to create “a steakhouse on steroids.” Envisioning a Midgley’s Public House in every major city in the country, Mike and Lacey ask for $350k in exchange for 40% of their company.
Their food costs appear to be a positive at first. With an appetizer that has an 87% profit margin, Midgley’s does turn a profit. However, their meat is not prime but choice and purchased from Sysco – the largest provider of food in the country. Joe points that this means that Midgley’s is not producing a product worth what they are charging. Moreover, the average quality of the food they are purchasing might keep Midgley’s from competing against similar restaurants with higher quality of food.
The Midgley’s also come off as too ambitious. They have earned $620k in the four months they have been open and they are already looking into starting a second location. Given that it took Tim five years before he opened up a second restaurant, he’s concerned that they are moving too fast. Compounding Tim’s concern is that he and Joe believe that the Midgley’s lack a clear vision for what they want their restaurants to be.
After carefully considering both presentations, Tim and Joe decide to launch Steak 55. While Midgley was profitable, Tim and Joe viewed Vinny’s and Trevor’s clear vision for Steak 55 as a better investment than the nebulous plan the Midgley’s had for Midgley’s Public House.
For the test run of this concept Tim and Joe make it clear that they want Vinny and Trevor to create a full New York style steakhouse, with a clear business plan to bring food costs down and a menu that costumers in their area can afford.
In short, Vinny and Trevor have to prove that they could run a profitable business.
With little time or money to spend, Vinny and Trevor met with Roy Rede to discuss the layout and design of the restaurant. From discussing the type of lighting, coloring, tables, and pictures on the wall, it quickly becomes clear that this is an area that Trevor excels out. A questionable design choice is that they even include several pictures of themselves to be framed and hung up throughout the space.
Afterwards, they meet with Antonia Lofaso who informs them of both their food budget ($7,500) and that the entire menu will have to be run by her first. Despite some shouting between Vinny and Trevor, they are able to produce a sample of the menu for Antonia. And Antonia finds the food to be excellent. However, she also finds their costs to be too high and reminds them that they needed to make these dishes more affordable so that they could increase their profit margins. Failure to do so could cost them an investment.
Following Antonia’s advice to create a small plate steakhouse, Trevor focuses on smaller plate sizes that can be shared while creating a new menu. Though this pivot was needed, it is clear that Vinny was bothered by what Trevor was asking for. After struggling with this issue they did find a way to create a new menu that would highlight affordability and be more profitable; a transformation that Antonia commends.
To help with the food preparation Vinny and Trevor were provided with employees for the launch. Unfortunately, one of the employees brought in to help cuts the meat into the wrong sizes. Worse yet, this mistake is pointed out to Vinny by Joe and Tim. Noticing that this employee can’t perform other tasks to the level Vinny wants, he fires him. It is a decision that removes an underperformer, but it also means that there will be one less pair of hands later in the night.
Launching 55 Steak
The launch of 55 Steak quickly reveals a problem with how Trevor and Vinny run a restaurant. They easily became overwhelmed when dealing with a flood of customers. Not only did Trevor take too many orders at once, Vinny and the kitchen staff were simply unprepared to handle all the orders in a systematic way. The wait for food becomes so severe that Tim takes off his jacket, joins the line and begins cooking.
Compounding the wait for food, Joe again finds fault in Trevor. Though Tim and Antonia both see that Trevor can keep Vinny focused, and did an excellent job at designing the restaurant aesthetics and its menu, Joe simply finds Trevor’s interactions with guests – including sitting down with them – to be unprofessional.
Despite these problems Joe and Tim see the potential in 55 Steak. In addition to enjoying the vibe of the restaurant, they find the food to be excellent and the overall idea worthy of investment.
The Deal Table
Speaking with Vinny and Trevor after the launch, Joe and Tim shared with them that the dinners overwhelming enjoyed the experience – with an exception that a majority of them felt that there were too many pictures of Vinny and Trevor. The check numbers also showed that Vinny and Trevor could build an affordable steakhouse.
Additionally, Joe and Tim remain divided on Trevor’s value to the business. Tim sees him as an important part of the operation in need of some learning and Joe sees him as just standard employee.
Due to the initial request of a $375k investment for a 25% stake in 55 Steak being too high, Vinny presents a new offer of $225k for 33% of the business. Tim’s counteroffer is a $125k for 30% of the business and his plan is to turn Room 55 into 55 Steak instead of creating a second location. Joe’s offer is $100k for 25% with his focus being on fixing the first restaurant so that it is profitable and then creating a scenario in which they can build a second one. Moreover, while Joe makes it clear that he will leave Trevor’s continued involvement in the business up to Vinny, Trevor needs to be start getting paid immediately.
With Trevor reminding Vinny to do what’s best for the business, Vinny decides to work with Joe.